HOW IS IT INNOVATIVE? Although there are other environmental insurance products available, there are no impact assessment-based solutions currently available. Many existing products are parametric-based, meaning they automatically trigger payouts based on predefined events like the occurrence of a fire or flood. The Restore product, on the other hand, evaluates the actual impact of an event to determine whether it triggers a claim under the policy or not. This is important because ecosystems have a biological elasticity to their resilience levels and an insured event may have a negative, neutral, or even positive effect on an ecosystem. This approach provides a more accurate and tailored response, allowing SCOR to cover the cost of getting the project back on its planned (or a revised) recovery trajectory. The Restore product is also uniquely scalable, meaning it can be applied to various restoration projects and meet the needs of various clients, making it versatile and valuable for a wide range of ecological restoration efforts. SCOR, in collaboration with the Society for Ecological Restoration (SER), has developed its own project review standards which ensures that the projects insured by the Restore product are nature positive. FROM RESTORE TO MANAGE AND CONSERVE The next evolution of the Ecological Restoration Insurance Solution will be to also offer our clients the “Manage” and “Conserve” products, which SCOR will be developing in due course. Together, this suite of products will address each step in the ecological restoration process, allowing SCOR to provide cover for these projects from inception to completion and ensure seamless protection against the risks faced along the way. In 2025, the team will be focused on taking the next steps toward bringing the Manage product to market and in the following years, the Conserve product will follow. Since ecological restoration projects span many years, this timeline will ensure each subsequent product is available by the time our clients are ready to take the next steps with SCOR. . RESTORING ECOSYSTEMS SCOR’s innovative solution for ecological restoration With many ecosystems rapidly declining and some at risk of collapse, there is now a greater understanding than ever of the importance of ecosystem integrity and resilience. Ecological restoration has become an international priority and COP16 highlighted that a more concerted effort is required around financing ecological restoration projects. However, due to the inherently unpredictable and dynamic nature of ecosystems and the drivers that impact them, the risks that come with such restoration projects seem to be deterring many otherwise willing investors from financing these projects. At SCOR, the role of the Product & Innovation team is to develop innovative (re)insurance solutions. Having identified this pressing problem, in May 2024, the team launched “Restore,” the first product proposed under the Ecological Restoration Insurance Solution, which itself falls under SCOR’s Nature Restoration & Conservation (NatReCo) Initiative. If an insured peril, such as a fire or flood, negatively impacts the trajectory of an insured ecological restoration project, the Restore product will cover the financial costs of getting the project back on track. With this insurance in place, the risk to investors in backing these projects will be reduced and they will have more confidence financing such projects, knowing their investment is protected and the project can resume if risk events occur. Available now: Restore Coming soon: Manage Coming soon: Conserve To be developed: Regenerative Agriculture Insurance Ecological Restoration Insurance Solution 68 ACTIVITY REPORT 2024
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